No. 1 Lesson in Competitiveness: Get Back to Basics

Leadership. STEM competence. Execution.

By Sarah A. WebsterEditor in Chief

On one hand, the forces driving the global economy, especially on the manufacturing front, are so fast-moving and complex, with different regulations, tax systems and laws, that they may seem difficult to grasp and quickly respond to at times.

On the other hand, I am struck by how much the basics still matter.

Nobody said the basics are easy to deliver in this complex world, of course, but they are still key: Leaders who (duh!) lead. Competent workforces that can execute in increasingly advanced environments. Lean Plan-Do-Check-Adjust approaches that are not just rooted in management memos but also in a company’s culture—and in reality.

The 2013 GMCI concluded that the No. 1 driver of a nation’s competitiveness is still talent. "The quality and availability of scientists, researchers and engineers and the quality and availability of skilled production workers are ranked as the first and second most important" competitiveness drivers, the report says.

Indeed. Just one year ago, the New York Times published an oft-quoted article, "How the US Lost Out on iPhone Work," which explained Apple’s rationale for not making its tech goodies in North America. The late Steve Jobs reportedly said "those jobs aren’t coming back," but not just because labor costs overseas are lower. Rather, the article offered evidence that the "industrial skills of foreign workers have so outpaced their American counterparts that ‘Made in the USA’ is no longer a viable option."

Any nation that can't provide the basics, such as an educated workforce, especially in STEM fields, surely stands to lose out in this globally competitive economy.

At the HBS event, which was held at the Henry Ford Museum in Dearborn, MI, and attended by Michigan’s top business leaders, several HBS professors led a discussion on the nation’s competitive challenges and the obvious importance of manufacturing to US innovation. (The discussion, by the way, couldn't help remind me of this Forbes article: "Finally Harvard Gets it.")

But the most passionate and instructive part of the night focused on what lessons could be gleaned from the crash and comeback of the Detroit Three automakers.

Based on a show of hands, the audience agreed that the Great Recession wasn’t some black swan event that caused the D3’s troubles. If it wasn’t the recession, it was going to be something else. Decades of mismanagement, pie-in-the-sky promises to labor, incremental turnaround plans, crummy gas-guzzling cars and trucks, as well as a lack of foresight, put the companies on an inevitable path to crisis.

It's worth noting the exception here, too. The Great Recession didn't sneak up on Ford Motor Co. That automaker had strong leaders who knew how to read the economic data, saw trouble brewing and hunkered down in preparation, surviving without the federally-backed bankruptcies that eventually cleansed GM and Chrysler.

Ultimately, the D3 revival can be credited not just to the massive restructurings, which finally acknowledged the depths of the companies' troubles, but also by strong leadership, plans based in reality, competent execution, and improved products, among other things. In other words: The basics.